E-invoicing under GST pick up speed, posts 17% growth in November

December 8, 2020 admin Comments 0 Comment

E-invoicing under goods and services tax (GST), overcoming early hiccups, picked up pace right in the second month of its roll-out, with bill generation posting 17 per cent growth in November over the previous month. This paves the way for the second phase of e-invoicing, which is to make it mandatory for entities with a turnover of Rs 100 crore and more from January 1 and the rest from April 1 for business-to-business transactions.

The e-invoicing system is now mandatory for entities with a turnover of Rs 500 crore and more. About 56 million invoice reference numbers (IRNs), or e-invoices, were generated in November against 48 million in October, reflecting economic demand revival.

Days ahead of Diwali, 3.26 million IRNs were generated on November 6, the highest since the rollout on October 1.

Daily invoice generation has now improved to 2.5-2.7 million per day compared to an average of 1.5 million a day in October.

“There are almost no complaints. This is because these are large firms with sound tech systems. We are prepared to roll out the next phase from January 1,” said a government official. The system is aimed at bringing in more transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance. It will help prevent tax evasion once it is made mandatory for small and medium firms.

With close to 20,000 GSTINs (GST identification numbers) in the Rs 500 crore and above category already there, another 90,000 GSTINs are estimated get added on January 1. E-invoicing testing for these entities started on November 15.

The e-invoice data started auto-populating the GSTR 1 or the sales return form from Friday. “The e-invoicing system will do away with the need for separate e-way bills,” said the official.

Abhishek Jain, tax partner, said firms with a turnover of Rs 500 crore and more, with small initial hiccups, smoothly adopted mandate, and this was evident from the increased number of IRN generation. While in the medium run, this mechanism will replace the existing e-way bill system, the Centre is hoping to dispense with filing GST returns for MSMEs.

Source: Business-Standard.

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E-invoicing Structure, as Envisioned by GSTN

March 4, 2020 admin Comments 0 Comment

e-invoicing Structure

The government has recently released a blueprint for implementing the E-invoicing system all over India, which proposes a working model as well as a standard format for the generation of E-invoices.

We shall look into the fundamentals of E-invoicing, to understand its mechanics in a better way.

The Two Important Components of the E-invoicing Model

The E-invoicing working pattern has been agreed upon globally with some minor variations in the mode of implementation. In India, it comprises of two essential components as given below:

Invoice Registration Portal (IRP) – The invoices, credit notes, and debit notes which are generated by the taxpayers, should be registered on the IRP, which subsequently generates a unique reference number known as the Invoice Reference Number (IRN), a QR code, and a digital signature for these items. In fact, an invoice will be valid for the purpose of Input Tax Credit, refund, etc., only if it is registered on the IRP
A standard format for the E-invoice – This standard pattern comprises of data fields and the necessary specifications. It is highly recommended for the businesses/taxpayers to upgrade their systems so as to follow this E-invoice format which enables seamless interoperability as well as data exchange all through the system.

The E-invoice Standard

The standardized E-invoice format recommended for India has been formulated in accordance with the global practices and the industry requirements for businesses in India. Further, this format has been confirmed after consulting with the respective trade authorities, the Institute of Chartered Accountants of India (ICAI), and also as per the opinions from the public.

There are around 120 fields, out of which about 50 are to be uploaded mandatorily on the Invoice Registration Portal for attaining the reference number as well as the digital signature.

Section	Compulsory	Non-compulsory	Total	Scope
Details of Invoice	11	7	18	Recognizing the distinctiveness and nature of invoices like the invoice number, type, date, etc., and also the IRP-generated details like the IRN
Details of Items	9	24	33	Details of line items like quantity, HSN, tax rate, etc.
Invoice Reference Details	2	8	10	Provides reference for previously generated or supplementary documents for the invoice
Additional Details of Items	1	8	9	Extra details which are related to line items like batch, barcode, serial numbers, etc.
Details of the Suppliers	5	5	10	GSTIN and address of the suppliers
Details of the Buyers	6	3	9	GSTIN and address of the buyers
‘Ship To’ Details	7	2	9	Address and other information like mode of supply, type of transaction, etc.
‘Dispatch From’ Details	4	4	8	Address and other information like E-commerce operator through which it was dispatched, state, etc.
*Details of Supporting Documents	0	2	2	The URLs which support the documentation, if any
*Payment Details	4	5	9	Payment terms, account information, etc.
Total	49	68	117

These sections are non-compulsory. If used, the mandatory fields are highly recommended. For other sections, ‘compulsory’ indicates that it is essential for registering on the IRP. In the case of line item, the data would repeat for each of these.

The E-invoicing Workflow

After the taxpayers generate the invoice using their respective accounting/ERP systems, the procedure of getting it registered with the government on the IRP, should be carried out.

There exists two components for the E-invoicing workflow namely,

The communication between the government and the taxpayers
The communication between GST, E-way bill system, and the IRP

Now let us look into the details of these two E-invoicing components.

The communication between the government and the taxpayers

The taxpayers are required to upload the compulsory fields from the invoices to the IRP in the JSON format. Further, there is provision to upload it through different methods like offline tools, GSPs (GST Suvidha Providers), web portal, mobile app, SMS, and via direct API.

Apart from providing a standard format for E-invoice, the government has also offered a model in which a unique IRN would be generated, which is technically referred to as ‘hash’, using SHA-256. Although the taxpayers could generate the IRN using their respective systems, the invoice would be valid only if it is registered with the IRP. The IRN thus generated along with the digital signature and QR code, would be reverted to the taxpayers through the same channel.

The communication between GST, E-way bill system, and the IRP

Considering the high volume of transactions on the IRP system while getting the invoice registered, the IRP comes with multiple nodes known as ‘Registrars’. The taxpayers have the option to register their invoices via any of these Registrars, and further, the latter preserves the data for the past 24 hours.

The IRP system is connected to the GST system, which acts as the repository of all IRNs, so as to ensure that there is no duplication of records. This arrangement also enables the populating of GST ANX-1 for the suppliers. Further, the E-invoice data is made available in the E-way bill system, and the transporters/taxpayers would just have to update the information on Part B in order to obtain a valid E-way Bill Number.

In fact, the taxpayers would have to upload the invoice data only once to the IRP system, wherein, the GST and E-way bill requirements would be dealt with.

To conclude, the basics of the E-invoice standard has been dealt with in detail here, which helps you to understand the entire process in a better manner.

GST: CBIC notifies E-Invoice System, Mandatory for Businesses with Rs 100cr Turnover from April 1, 2020

December 16, 2019 admin Comments 0 Comment

The Central Board of Indirect Taxes and Customs ( CBIC ) has notified E-Invoice System mandatory for business with Rs. 100 crores turnover from April 1st, 2020.

The E-invoice will be mandatory for both these businesses categories. For businesses having turnover less than 100 Crore, it would remain voluntary and on trial basis from 1st April 2020.

The upcoming ‘E-invoicing’ system will be a boon to MSMEs as it will open the facility of instant bank loans for MSMEs. With the new system of E-invoicing, banks may not require a plethora of physical documents and their validation processes rather they can do MSMEs’ ratings for the loan on the basis of their e-invoicing. Also, the E-invoicing will bring in ease of doing business as it will pre-populate the GST returns besides reducing the reconciliation problems.

In the Notification, the CBIC has also notified the GST electronic portals for the generation of e-invoice and E-Invoice Rules.

Having done a full preparation for last 6 months to introduce E-invoicing system, the government has decided to start ‘E-invoicing’ in a phased manner for generating business to business (B2B) invoices on a voluntary basis. It has been decided by the government that businesses having a turnover of Rs.500 Crore or more would take up E-invoicing from 1 st January 2020 on voluntary and trail basis while the businesses with a turnover of Rs.100 Crore or more would start E-invoicing on voluntary and trial basis from 1st February 2020. However, from 1st April 2020, the E-invoicing will be mandatory for both these businesses categories. For businesses having turnover less than 100 Crore, it would remain voluntary and on trial basis from 1st April 2020.

The basic aim behind the adoption of the e-invoice system is to facilitate convenience to the taxpayers by further simplifying the GST Return system. Through E-invoicing the tax department would help the businesses and taxpayers by pre-populating the returns and this would also result in reducing the reconciliation problems. Actually the fundamental principle behind introducing the e-invoicing is to put the technology at the service of the people to create ease of living and ease of doing business.

The E-invoicing system would help to generate invoice in a standard format so that invoice generated on one system can be read by another system and reporting of e-invoice to a central system becomes possible. The adoption of these standards would not impact the users of invoice; however, all the accounting software would adopt the new e-invoice standard wherein they would re-align their data access and retrieval in the standard format.

The generation of e-invoice will be the responsibility of the taxpayer who will be required to report the same to Invoice Registration Portal (IRP) of GST. This portal will generate a unique Invoice Reference Number (IRN) and digitally sign the e-invoice and also generate a QR code. The QR Code will contain vital parameters of the e-invoice and return the same to the taxpayer who generated the document in the first place. The IRP will also send the signed e-invoice to the recipient of the document on the email provided in the e-invoice.

E-invoice would not mean the generation of invoices from a central portal of the tax department. The taxpayer would continue to use his accounting system/ERP or excel based tools or any such tool for creating the electronic invoice as s/he is using today. To achieve this goal there would be a need to standardize the format in which electronic data of an Invoice will be shared between various stakeholders to ensure interoperability of the data.

Source: TaxScan.

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